Japan's consumer spending drops again

TakashiNakamichi

TOKYO--Japanese consumer spending fell for a second straight month in April, offering Prime Minister Shinzo Abe yet another reason to delay a sales tax increase scheduled for next year.

Household spending decreased 0.4% from a year earlier in April, adjusted for price changes, after dropping 5.3% in the previous month, according to data released Tuesday by the Ministry of Internal Affairs and Communications.

Economists polled by The Wall Street Journal and the Nikkei expected a 1.3% fall.

Weakness in consumption, which accounts for 60% of Japan's economic output, added to signs that the economy isn't out of the woods yet despite a modest rebound in the January-March quarter. Exports fell 10% in April as U.S.-bound shipments decreased the most in five years. Consumer prices slipped 0.3% in that month. Corporate earnings have also shown signs of losing steam.

One of the few bright spots has been employment. The jobless rate for April stood at 3.2%, unchanged from the previous month, according to the ministry. Separate data from the Ministry of Health, Labor and Welfare shows that there were 134 jobs for every 100 people seeking work in April, a jump from the previous month's 130 and the best showing since November 1991. Still, an improved labor market has yet to translate into the wage growth needed to stimulate consumption or inflation.

Mr. Abe is set to reboot his pro-growth strategies after the disappointing results of three years of Abenomics, a policy mix made mainly of monetary easing and government spending. Mr. Abe has been persuading ruling-party politicians to agree to postpone a two-percentage-point increase in the sales tax to 10%, to late 2019 from the currently scheduled April 2017. He is also widely expected to compile a large spending package.

Etsuro Honda, Mr. Abe's closest economic adviser, also wants the Bank of Japan to contribute to the revamping of Abenomics by further increasing monetary stimulus.

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